Popular Chinese-owned store in Kenya shuts doors after rival traders complain about prices
February 27, 2023, 5:30 pm
A newly opened Chinese-owned supermarket in the Kenyan capital has temporarily shut its doors after competitors alleged that it was driving them out of business with low-priced goods.
China Square, located at Unicity Mall, 18km (11 miles) northeast of the Kenyan capital, said on Sunday that it would stop operations temporarily "to allow us to re-evaluate and replan our company strategy".
China Square owner Lei Cheng said the company would also be "considering the possibility of cooperating with local traders to enhance our offerings and better integrate with the community".
"We apologise for any inconvenience this may cause and hope that you will understand our need to take this action," Cheng said, adding that the business would reopen on Monday.
China Square opened on January 29, offering a range of household items, from kitchenware to furniture and hardware.
The mall was immediately popular but Kenyan traders claimed that China Square cut them out of the market by selling its goods at a deep discount.
The traders from various competing trading centres took their complaints to Kenyan deputy president Rigathi Gachagua last week, appealing for action and threatening to stage protests.
"I have hosted representatives of small traders from Nyamakima, Kamukunji, Gikomba, and River Road for discussions on addressing challenges in their businesses in the capital city," Gachagua said after the meeting on Thursday.
"We have agreed to have further consultations with more members on Wednesday, March 1, next week towards sustainable solutions to the issues affecting these small-scale traders."
China Square opened in Nairobi on January 29, offering a range of household items. Photo: Simon Ciuri, Kenya alt=China Square opened in Nairobi on January 29, offering a range of household items. Photo: Simon Ciuri, Kenya>
Then on Friday, Kenyan Trade Minister Moses Kuria said he had held talks with Kenyatta University, which owns Unicity Mall, about leasing the site to the competing small traders.
"I have today given an offer to ... Kenyatta University to buy out the lease for China Square, Unicity Mall and hand it over to the Gikomba, Nyamakima, Muthurwa and Eastleigh Traders Association [Kenyan small scale traders]," Kuria said.
"We welcome Chinese investors to Kenya as manufacturers not traders."
He said he would help China Square's owner to set up a manufacturing plant in Kenya to produce goods that could be traded rather than competing with local small-scale traders.
"I will assist China Square owner Mr Cheng to set up a manufacturing plant in Kenya and work on a distribution partnership with Gikomba, Nyamakima, Eastleigh, Kamukunji, Muthurwa and River Road Traders," he said.
But Cheng said the move was discriminatory and Chinese firms should be allowed to operate just like other foreign-owned businesses.
"If other foreigners can do business in Kenya so can Chinese because we have done nothing wrong. Our customers are happy because we have drastically reduced our prices," Cheng said.
Cheng told the Nairobi-based Daily Nation newspaper that in the first two weeks in business, China Square's sales reached KSh20 million (about US$158,088) a day.
"Nowadays, on a bad day we sell goods worth KSh10 million (US$79,044)," Cheng was quoted as saying.
"My business is legal and is centred on healthy competition. We have cooperated with all government directives for opening a business in Kenya and we are here to break the monopoly. The people who are fighting us feel threatened because Kenyans now know we exist and we are not exploiting them in pricing."
Prominent lawyer Ahmednasir Abdullahi also spoke out against the trade minister's decision.
"CS Moses Kuria is obviously wrong in his onslaught against Mr Lei Cheng of China Square. 'Kenya is open for business' is Kuria's mantra, yet he is at war with Cheng for succeeding in his business model (selling cheapest),"Abdullahi tweeted on Sunday.
This is not the first time that Chinese traders have found themselves in trouble with authorities. In 2019, Kenyan authorities deported seven Chinese nationals for trading illegally in Nairobi's Gikomba and Kamukunji markets.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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